AG Rutledge argues for income tax elimination, while Democratic governor hopefuls oppose

GOP gubernatorial hopeful Attorney General Leslie Rutledge wants to eliminate Arkansas’ individual income tax by 2030 through a constitutional amendment. Three Democrats vying to challenge for governor – Dr. Anthony Bland, Dr. Chris Jones and James “Rus” Russell – oppose the proposal and have advocated finding additional efficiencies in state government while not raising taxes.

All four candidates participated in Republican and Democratic education town halls sponsored by KATV and Talk Business & Politics. Rutledge appeared in a GOP town hall on education, while her primary opponent, Sarah Huckabee Sanders, declined to attend. Three of the four Democrats who have announced for governor attended the Democrats’ town hall. The fourth candidate, Supha Mays, originally committed, but a scheduling conflict caused her to miss the forum.

Rutledge announced earlier this summer a proposed constitutional amendment to fully eliminate the Arkansas income tax by 2030. The text of a proposal and a petition campaign to get it on the 2022 ballot have yet to be released.

The top individual income tax rate in Arkansas is 5.9%. Based on the past fiscal year, eliminating the individual income tax would cut $3.467 billion from the state’s $6.845 billion state general revenue budget. Rutledge said she does not propose raising other taxes to make up the revenue cuts.

Roughly 70% of state general revenue is spent on K-12 and higher education. When challenged on what programs would be reduced or cut by the tax elimination, Rutledge said those details would be coming at a later date.

“Well, it [the math] doesn’t add up right now because we haven’t even started working on it,” she said. “I think it’s important to be transparent and so we’re going to be rolling out that economic plan of how we’re going to make up for that. This was the initial [plan] to announce that we’re going to do it by constitutional amendment because I believe that the people of Arkansas, and not politicians, should be the one to decide whether or not we had a personal income tax that we’ve chipped away at it over the years. Unfortunately, we haven’t chipped enough away at what we are eliminating in government.”

Over the past five fiscal years, the state of Arkansas has averaged about 2.5% revenue growth. To eliminate the income tax and replace it with growth revenue, the state would need to see about 6.5% annual revenue growth over eight years to remain revenue neutral.

“I’m saying that as we move it out, it’s not accounting for what we’re moving in and what services that we’re hopefully we’re going to move in new jobs and more manufacturing because two of our states that are contiguous to us – Tennessee and Texas – do not have a personal income tax. They’ve seen growth… so why can’t Arkansas?”

“First and foremost, I would definitely not raise taxes,” said Dr. Anthony Bland. “If 70% of it is going to education, who are we harming?… I have a very big problem with politicians that show one person this hand and hide this hand. I cannot agree with that. If it’s going to harm our teachers, our police officers, our students in school, our public education system, where we’re now not even using all of the facilities that we have in our state for education… so I do not agree with taking away something that will cause possibly more harm than help.”

“It’s a short-sighted proposal for a couple of reasons. One, to lock us into a situation without knowing the future is short-sighted, but more importantly what are you going to cut?” said Dr. Chris Jones. “When I think about a proposal that would eliminate such a large portion of the budget, what I’m seeing is fewer teachers, fewer police officers to keep our community safe, fewer hospitals in rural areas to keep our communities healthy. And that to me, is what would destroy our community as opposed to uplifting our communities. So, I don’t support it, I would advocate hard against it, and I think there are other ways to make sure that we’re efficient and effective while also making sure that we’re providing every opportunity for the citizens of Arkansas.”

“I don’t think it was coincidental that the plan that Mrs. Rutledge announced the other night was incremental over an eight-year period, which would be her ideal two terms, which would leave someone else with a crisis to put up with that had been created by that implementation,” said James “Rus” Russell. “You do find out where your values lie based on where your spending is. And if you’re going to eliminate that [income tax], you’re either going to have a deficit and things are going to suffer or you’re going to make that up somewhere else.”

You can watch the full town hall interviews with all candidates in the videos below.